DieselDragRacer
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Southwest Airlines Co. overhauled its frequent-flier program to add rewards with no black-out dates and redemptions for international flights on other carriers.
The first major revamp of the Rapid Rewards loyalty plan since it began in 1987 should add “several hundred million” dollars a year in revenue, Chief Executive Officer Gary Kelly said yesterday at a briefing at Southwest’s Dallas headquarters.
Southwest, the largest low-fare airline, spent almost $100 million on the project and aims to win new customers and deepen ties to existing business travelers, who generally pay higher prices. The carrier unveiled a related website for passengers today to explain the changes, which take effect March 1.
“If we get our fair share of frequent fliers, the opportunity is huge,” Kelly said. “We’re very confident this is a good investment.”
Rapid Rewards members now receive a credit for each flight and earn a free flight after accumulating 16 credits. The system doesn’t reward longer flights with more credits and doesn’t let passengers amass credits beyond 16.
“As soon as you earn a reward, you’re free from Southwest,” Kelly said. “It doesn’t encourage loyalty.”
The new program gives points, based on the ticket price and the fare category, that can be accumulated for larger awards. The points per dollar rate increases with the type of fare.
No Expiration
There is no expiration date as long as the account remains active in a 24-month period, and there are no black-out dates on which redemptions are banned and no limit on awards redeemed per flight, said Ryan Green, Southwest senior director for loyalty.
Points also can be redeemed through a third-party provider for international flights and those to Hawaii, hotels and rental cars, even though Southwest flies only in the 48 contiguous U.S. states. Points can be purchased under the new program to move closer to an award. Southwest also is adding a second elite- flier category for those who travel most often that includes additional benefits.
Even with the more generous rewards, Southwest doesn’t expect award redemptions to surpass their current 7 percent to 8 percent of total revenue passenger miles, Kelly said. Southwest also doesn’t expect ongoing costs of the new plan to be materially different from current levels.
The program’s structure further differentiates Southwest from competitors, said Dave Ridley, senior vice president for marketing and revenue. It is the only major U.S. carrier that doesn’t charge to check a first and second bag or to make changes to a purchased itinerary and it doesn’t assign seats.
“We have the very best bag policies, the very best change policies, the very best customer service,” Ridley said. “Now we have the very best frequent-flier program. It has to bring new customers to us.”
http://www.bloomberg.com/news/2011-...irst-revamp-in-23-years-to-boost-traffic.html
The first major revamp of the Rapid Rewards loyalty plan since it began in 1987 should add “several hundred million” dollars a year in revenue, Chief Executive Officer Gary Kelly said yesterday at a briefing at Southwest’s Dallas headquarters.
Southwest, the largest low-fare airline, spent almost $100 million on the project and aims to win new customers and deepen ties to existing business travelers, who generally pay higher prices. The carrier unveiled a related website for passengers today to explain the changes, which take effect March 1.
“If we get our fair share of frequent fliers, the opportunity is huge,” Kelly said. “We’re very confident this is a good investment.”
Rapid Rewards members now receive a credit for each flight and earn a free flight after accumulating 16 credits. The system doesn’t reward longer flights with more credits and doesn’t let passengers amass credits beyond 16.
“As soon as you earn a reward, you’re free from Southwest,” Kelly said. “It doesn’t encourage loyalty.”
The new program gives points, based on the ticket price and the fare category, that can be accumulated for larger awards. The points per dollar rate increases with the type of fare.
No Expiration
There is no expiration date as long as the account remains active in a 24-month period, and there are no black-out dates on which redemptions are banned and no limit on awards redeemed per flight, said Ryan Green, Southwest senior director for loyalty.
Points also can be redeemed through a third-party provider for international flights and those to Hawaii, hotels and rental cars, even though Southwest flies only in the 48 contiguous U.S. states. Points can be purchased under the new program to move closer to an award. Southwest also is adding a second elite- flier category for those who travel most often that includes additional benefits.
Even with the more generous rewards, Southwest doesn’t expect award redemptions to surpass their current 7 percent to 8 percent of total revenue passenger miles, Kelly said. Southwest also doesn’t expect ongoing costs of the new plan to be materially different from current levels.
The program’s structure further differentiates Southwest from competitors, said Dave Ridley, senior vice president for marketing and revenue. It is the only major U.S. carrier that doesn’t charge to check a first and second bag or to make changes to a purchased itinerary and it doesn’t assign seats.
“We have the very best bag policies, the very best change policies, the very best customer service,” Ridley said. “Now we have the very best frequent-flier program. It has to bring new customers to us.”
http://www.bloomberg.com/news/2011-...irst-revamp-in-23-years-to-boost-traffic.html
